Are you being offered a sign-on bonus? Read this first!

If you are looking for a job in a hot industry, then you may get lots of job offers. In addition to a competitive salary, you might be offered perks such as a sign-on bonus. Why would a company pay someone a bonus before they’ve even started working for them? Simple. Companies want the best people, but they know that the best will have lots of offers so they do everything they can to “sweeten the pot.” But it’s important to know the ins and outs of sign-on bonuses before you accept the job.

In this article, we’ll discuss signing bonuses and what you need to know, including:

• What exactly is a sign-on bonus?

• Why will a company offer a signing bonus?

• How does a sign-on bonus work?

• What should I expect for a signing bonus? 

• How are sign-on bonuses taxed?

• 5 companies that are offering signing bonuses now

What is a sign-on bonus? 

While a sign-on bonus is usually a one-time sum that is paid upfront for accepting a job, anything given to you by an employer upon signing can be considered a signing bonus. Signing bonuses are more common for higher-level or executive positions, but it is becoming more common for mid and entry-level positions in certain industries due to the high demand for those positions.

A sign-on bonus can be delivered in several ways. It could be a one-time payment or paid out over time—for example, a portion up front, and then another payment after your probationary period. Or, the company may offer you compensation through stocks or options, offering to pay your relocation costs, or additional PTO.

Why companies offer sign-on bonuses

Employees are the lifeblood of any company, and employers want to attract the best. But they may not have it in their budget to pay a higher salary than their competition, so a signing bonus might be offered instead. 

Instead of signing bonuses, a strategy some companies use is to offer a package of special perks to new employees that may include, for example, gym memberships, discounts, and free travel. The key with these bonuses, however, is that what they are calling a sign-on bonus is something that they do not already offer to all employees — otherwise, it’s not really a bonus!  

Also, weigh their value very carefully against the other position factors such as hours, benefits, and your commute. What may seem like a good deal may not be worth as much as you thought.

Other things to consider about your sign-on bonus

You may never have thought of this, but companies also offer bonuses to get people to relocate to less desirable locations. If you have no preferences about where you live, then it may be a great offer. Otherwise, take a pass. Your work-life balance and distance from family and friends may take priority over a new job.

Look closely at the total compensation package, not just the signing bonus. Is it competitive with your other job offers, or aligned with what similar jobs in the same industry are offering? Is the sign-on bonus enough to make up for a lower salary? Ultimately, the answer may be yes, but study this carefully before making a deal.

Which industries have the most sign-on bonuses?

As of July 2022, the industries with the highest number of sign-on bonuses are:

• Nursing: 18.1% 

• Driving: 15.1%

• Dental: 14.7%

• Veterinary: 13.5%

• Medical technician: 12.6%

• Physicians and surgeons: 11.4%

• Childcare: 11.3%

• Personal care and home health: 11.3%

Remember, a sign-on bonus is a one-time thing. Even if the payment is split, it’s not a recurring bonus you’ll receive every year. They’re separate from other types of bonuses, like performance bonuses.

What to expect with a signing bonus

A sign-on bonus, as its name suggests, is usually negotiated before receiving an employment contract. But once you sign on the dotted line, there’s no more room for negotiation. And you won’t be taken by surprise when it comes to signing bonuses. Companies know that it can be a major selling point for the position, so it most likely will be highlighted in job postings. However, if you do not see a signing bonus mentioned, it is probably not available for the job, but it never hurts to ask.

Keep in mind that a sign-on bonus is not a “free gift with purchase.” There will always be strings attached, so it pays to examine the offer closely. They often require you to stay with the company for a minimum length of time (one year or more). So, if you quit before that time elapsed, you will probably have to pay back any bonus that was given or have it deducted from your check. 

How much is a typical sign-on bonus?

It depends on the job, the industry, and how in-demand you are. There are cash signing bonuses that can range from $100 to over $100,000. Many job postings will include exactly how much the sign-on bonus is within the job description, but often higher level positions will not include this number; they are negotiable once you’ve received an offer.

Certain industries have higher sign-on bonuses, such as healthcare, software/IT, automotive, and cosmetology. Some examples of in-demand skills are sales, customer service, marketing, and communication. More specific technical skills are project management, finance, tech skills, and data analysis. To make the most of your bonus-earning opportunities, develop skills to make yourself more valuable to future employers.

5 Companies that are offering sign-on bonuses

So now that you know what these bonuses are, who’s offering them? All companies want to attract top talent, but the five companies that offer impressive signing bonuses include:

1. Amazon. The tech company is offering sign-on bonuses of $1,000 to $3,000, but you have to be employed for 180 days and the bonuses are paid in multiple installments.

2. Marriott. This major hotel chain offers sign-on bonuses of $1,500 to $5,000, depending on position and department.

3. United Airlines. This airline offers a $1,000 signing bonus (plus free flights) to many of its employees. Other positions that come with heft signing bonuses include $15,000 for ramp agents, $20,000 to $50,000 for aircraft maintenance technicians, $10,000 for storeroom workers, and $5,000 for facilities management.

4. Baptist Health. The healthcare organization offers a range of sign-on bonuses, depending on skill and position, such as $5,000 for physical therapists and up to $20,000 for nurses.

5. Raytheon. The defense and manufacturing company offers sign-on bonuses of $10,000 to $30,000 for researchers and engineers.

A signing bonus can be an alluring offer, but you must do your homework before accepting. Take into consideration how large the bonus is, its terms, your salary, relocation, and any other perk that might come with it. You may find that it's all worth it, but if it's not, it's important to know your value and feel confident in walking away.

Wondering what your skills are worth in today’s job market? Check out Career.io’s Salary Analyzer tool and make sure you’re getting an offer that aligns with similar jobs in your market.

Key takeaways

1. A sign-on bonus is money offered above and beyond the normal ongoing compensation for a job.

2. There are many forms of signing bonuses besides a lump sum cash payment, such as stock options.

3. Read the contract carefully and understand the bonus terms before signing. 

4. Take advantage of skills, knowledge, and experience that are in high demand to get the best bonuses.